EQUITY‑BASED COMPENSATION

We currently maintain four equity compensation plans, namely our Fourth Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), our Amended and Restated 2000 Stock Plan, the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan and our 2015 Employee Stock Purchase Plan (“2015 ESPP”). In May 2017 at our annual meeting of stockholders, our stockholders approved an amendment to our 2007 Plan to, among other things, increase the number of shares of our common stock available for issuance thereunder by 2,485,000 shares. All outstanding stock options granted under each of our equity compensation plans have an exercise price equal to the closing price of a share of our common stock on the grant date (excluding purchase rights under our 2015 ESPP).

Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2017:



	2007 Equity		2000 Equity	2013 Lumara		Inducement
	Plan		Plan	Equity Plan		Grants		Total
Outstanding at December 31, 2016	2,158,822		5,200	134,181		814,975		3,113,178
Granted	931,417		—	—		91,100		1,022,517
Exercised	(90,696	)	—	—		—		(90,696	)
Expired or terminated	(306,070	)	—	(7,969	)	(72,125	)	(386,164	)
Outstanding at September 30, 2017	2,693,473		5,200	126,212		833,950		3,658,835

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2017:



	2007 Equity		2000 Equity	2013 Lumara		Inducement
	Plan		Plan	Equity Plan		Grants		Total
Outstanding at December 31, 2016	773,804		—	27,694		135,456		936,954
Granted	790,476		—	—		24,300		814,776
Vested	(349,306	)	—	(12,831	)	(45,662	)	(407,799	)
Expired or terminated	(181,986	)	—	(752	)	(9,819	)	(192,557	)
Outstanding at September 30, 2017	1,032,988		—	14,111		104,275		1,151,374

In February 2017, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 191,250 shares of common stock. These performance-based RSUs will vest, if at all, on February 22, 2020, based on our total shareholder return (“TSR”) performance measured against the median TSR of a defined comparator group of companies over a three-year period. As of September 30, 2017, the maximum shares of common stock that may be issued under these awards is 162,750. The maximum aggregate total fair value of these RSUs is $3.2 million, which is being recognized as expense over a period of three years from the date of grant.

Equity-based compensation expense

Equity-based compensation expense for the three and nine months ended September 30, 2017 and 2016 consisted of the following (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Cost of product sales and services	$	566		$	118		$	892		$	395
Research and development	799			858			2,651			2,583
Selling, general and administrative	5,024			4,492			14,515			13,831
Total equity-based compensation expense	6,389			5,468			18,058			16,809
Income tax effect	(1,805		)	(1,568		)	(5,127		)	(4,637		)
After-tax effect of equity-based compensation expense	$	4,584		$	3,900		$	12,931		$	12,172

We reduce the compensation expense being recognized to account for estimated forfeitures, which we estimate based primarily on historical experience, adjusted for unusual events such as corporate restructurings, which may result in higher than expected turnover and forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We adopted ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) during the first quarter of 2017. We will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur. For additional information, see Note Q, “Recently Issued and Proposed Accounting Pronouncements.”